British pound holds support at 200-day moving average as U.K. scores Brexit extension

The British pound on Thursday was able to shake off Brexit drama and an early morning selloff to regain its footing in New York trade.

After nearly six hours of deliberation, European Union leaders granted the U.K. a second extension to its Brexit deadline to Oct. 31, which includes a clause that would allow Britain to exit from the EU earlier should Prime Minister Theresa May win parliamentary approval for a divorce plan.

“The takeaway is that neither side wants a no-deal Brexit. It also appears likely that the endgame is some sort of soft Brexit. Over six months remain for a deal to be struck but never underestimate the capacity of politicians to go to the brink once again. May must now sell this latest compromise to an increasingly skeptical Parliament,” wrote analysts at Brown Brothers Harriman in a Thursday note.

In afternoon trade the pound
GBPUSD, +0.4266%
was a little lower versus the dollar at $1.3061 compared with $1.3089.

Sterling fell to an intraday low below $1.30 but was able to hold support near the 200-day moving average, a closely watched momentum indicator.

In the U.S., the greenback is trying to avoid a fourth consecutive losing session. The ICE Dollar Index,
DXY, -0.25%
a measure of the greenback’s strength versus six of its major trading partners, was trading at 97.192, up 0.2%. The index is down 0.3% this week.

“Leveraged money positioning is still inhibiting USD strength, but on the flip side, FX investors are in a data-dependent state as far as global growth risks are concerned,” wrote Stephen Gallo, European head of FX strategy at BMO Financial Group.

The better-than-expected data didn’t help U.S. equity markets. The Dow Jones Industrial Average
DJIA, +0.37%
was off 43 points, or 0.2%, the S&P 500
SPX, +0.14%
was down 0.1% and the Nasdaq Composite
COMP, +0.11%
fell 0.3%.

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